High out-of-pocket costs for health care services can put necessary care and medications out of reach for many people. In one survey, nearly half of adults reported difficulty paying for health care services. In this brief, we used HCCI's commercial claims dataset, which includes health care spending information for over one-third of the population who receives health insurance through their job, to examine how much people pay out-of-pocket for health care. We look at how much out-of-pocket spending varies across individuals and how people pay these costs (i.e., through deductibles, copayments, or coinsurance). We find that, on average, people with employer-sponsored insurance (ESI) paid $853 out-of-pocket on health care services in 2020, though some people—in particular, those with a hospital stay—paid much more.

People with ESI Paid an Average of $853 Out-of-Pocket, But 6% Spent Over $3,000

On average, people with ESI who used at least one health care service (85% of people in our data) and had some out-of-pocket spending (88% of users) spent $853 out-of-pocket on health care services in 2020, including hospital and physician care as well as prescription drugs. This average masks large differences in what ESI enrollees paid. As shown in Figure 1, just under one-quarter of people had out-of-pocket spending under $100 (22%), while more than one-third (35%) had spending over $500. At the high end, 6% of enrollees paid over $3,000 and 2% paid over $5,000. We show results for 2020 here, but data from 2019 are consistent with these findings; see the Downloadable Data accompanying this brief.

Figure 1. Average Out-of-Pocket Spending was $853, but Some Enrollees Paid Much More

The 3% of ESI Enrollees with a Hospital Stay had the Highest Out-of-Pocket Spending

Out-of-pocket spending varies based on how many and what types of services people use, how much these services cost, and the structure of cost sharing in the individual's health plan. In particular, people with an inpatient hospital stay during the year paid more than four times as much out-of-pocket ($3,161 on average) as those who did not have a stay ($660 on average), as shown in Figure 2.

However, hospital use was relatively rare – only 3% of ESI enrollees had an inpatient admission in 2020. In contrast, most people (about 80%) used a physician service such as an office visit, but costs associated with these services were much lower. People who used these services spent, on average, $768 out-of-pocket in 2020 (Figure 2).

Figure 2. Out-of-Pocket Spending on All Services was Especially High for People with a Hospital Stay ($3,151 With an Inpatient Hospitalization, $660 Without an Inpatient Hospitalization)

Most Out-of-Pocket Spending was Paid in the Form of Deductibles

Cost sharing comes in the form of copayments (a flat dollar amount which a patient pays for a health care service), coinsurance (out-of-pocket payment based on a percentage of the full cost of a service), and the full cost of any services a person receives while they are still in the deductible phase of their coverage (i.e., before their insurance covers any costs).

These different types of cost-sharing can have implications for affordability and budgeting within families and therefore, influence how people experience the financial burden of health care costs. Copayments are a predictable, fixed amount (e.g., $25 for a primary care visit) while coinsurance, because it is a percentage of the full cost, is harder to predict. In the deductible phase of insurance, people may face extremely large bills since they effectively have no insurance coverage.

Overall, we found that more than 50% of out-of-pocket spending was incurred through deductibles in 2020. The remaining share of out-of-pocket spending was evenly distributed between copayments and coinsurance (22% and 23%, respectively).

Lowering Out-of-Pocket Spending is Important for Access to Care

The average of $853 in out-of-pocket spending is considerable for most households, exceeding the combined monthly cost of utilities, clothing, education, and household operations. The financial burden of health care is even greater for the 6% of people with out-of-pocket spending over $3,000, which equates to the monthly cost of rent for a two-bedroom apartment, groceries, and transportation for the average U.S. household.

There has been considerable policy focus on "surprise bills," which people may receive when they seek care at a hospital that is in their network but (unknowingly at the time) are cared for by a physician who is not in their network. In 2022, the No Surprises Act took major steps to protect patients from these bills. Out-of-network bills, however, make up a relatively small amount of health care spending. The findings in this brief suggest that a broader focus on out-of-pocket costs (e.g., lowering health care prices which contribute to high out-of-pocket spending, particularly on inpatient care) is needed to improve access to health care services for people with ESI.

High out-of-pocket costs disproportionately impact vulnerable populations, such as Black and Hispanic and low-income individuals. These populations experience bigger gaps in private insurance coverage and spend a greater share of their income on health. In turn, they are twice as likely to skip care, citing cost as the main barrier. Delaying or forgoing needed care has led to a widening gap in health status between high- and low-income individuals and reports of worse health, medical debt, and dissatisfaction with care among vulnerable populations. These downstream implications of high out-of-pocket costs suggest it is necessary for policymakers, insurers, and providers to address rising out-of-pocket costs to promote equitable access to care.